• Sunday, May 26, 2024
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Guinea-Bissau’s economy to rebound by 2.5% in 2014


The International Monetary Fund (IMF) has said that economic activities in Guinea-Bissau is expected to recover before the end of 2104 after the shocks generated by two years of economic disruption.

Felix Fischer, who led an IMF mission to Guinea-Bissau between September 15 and September 25, stated this in a report released at the end of the mission.

He said the team also reached a staff-level agreement under the IMF Rapid Credit Facility (RCF) to provide financial assistance to Guinea-Bissau.

Fischer said that the staff-level agreement would be subjected to an executive board’s approval before funds would be accessed by Guinea-Bissau.

“Economic activity is projected to gradually recover from the internal and external shocks of the past two years and real GDP is projected to grow by 2.5 per cent in 2014.

” Inflation rate in July 2014 was negative at 0.6 per cent, but expected to turn positive by the end of the year in the context of a recovery in domestic demand,’’he said.

Fischer said the new government in the country which inherited very difficult conditions, had placed treasury bills in the regional market and begun the rebuilding of government revenues.

“After two years of economic disruption, eroded government revenues, a compression in social spending and accumulated external and domestic arrears, real GDP fell by two per cent and poverty increased markedly.

“The share of the rural population facing severe food insecurity also increased from 20 to 40 per cent,’’ he said.

The IMF official who said that cashew exports farm gate prices had recovered substantially during the year, however, noted that official export levels still remained low.

He said that the mission welcomed government’s decisions to explore more efficient and pro-poor alternatives to promote cashew sector development.

Fischer said that Guinea-Bissau’s balance of payments and budgetary needs should be urgently addressed to restore budgetary discipline and improve tax and customs revenue collections.

He said the move would also enhance tax control and reduced exemption, improved business environment and inclusive growth.

Guinea Bissau was hit by a coup in April 2012, two weeks before the second round of its presidential election.

The country returned to constitutional democracy in June 2014 with the election of former Finance Minister, Jose Vaz as its new President.